Phillips Petroleum Buying Tosco

Updated from 3:13 p.m. ET

Phillips Petroleum (P Quote) said Sunday it agreed to buy Tosco (TOS Quote) for $7 billion in stock.

"This transaction transforms Phillips into a stronger major integrated oil company," the company said in a press release. "The new Phillips has the balanced assets, scale and financial flexibility necessary for continued profitable growth. Phillips will be a premier competitor in the domestic refining, marketing and transportation business, and will benefit from the competitive advantages of integration through its role as a major participant in the global exploration and production business, and its gas gathering and chemicals joint ventures."

The Wall Street Journal, which first reported the deal Sunday, noted that the deal would make Phillips the nation's second-biggest oil refiner and fifth-biggest gas retailer. But the newspaper, in a report in its online edition Sunday, also said the move runs counter to industry trends, which involve dumping refining operations to focus on more profitable exploration and production. ...